Limiting the Magnitude of Future Climate Change (2010) / Chapter Skim
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5 Fostering Technological Innovations
5 Fostering Technological Innovations
Pages 137-164
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From page 137... ...
To answer this question, this chapter explores the ways in which technological innovations can affect future GHG emissions, the nature of the technology innovation process and the factors that influence it, and the roles of government and the private sector in bringing about desired innovations and changes in technological systems. THE ROLE OF TECHNOLOGICAL INNOVATION As discussed in Chapters 2 and 3, GHG emissions depend strongly on the types of energy sources and technologies that are used to provide the goods and services that society seeks.
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Efforts to stimulate technological innovation must be broad enough to affect this full range of possibilities and may also encompass innovations in social and institutional
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. Figure 5.1 shows one estimate of how technological innovations can reduce the future cost of GHG emissions reduction.
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. Some technological innovations create new markets or expand existing ones, as exemplified by cell 0
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Only government action that requires or makes it financially worthwhile to reduce GHG emissions can create sizeable markets for the products and services that enable such emissions reductions. Government actions to create or enhance markets for GHG emissions-reducing technologies are thus a critical element of the technological innovation process.
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From page 142... ...
In addition, accelerating technological innovations that reduce GHG emissions will require a variety of policy drivers -- to promote R&D, to help commercialize and bring new technologies to the marketplace, and to establish and expand markets for low-GHG technologies. Thus, we also review below current U.S.
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From page 143... ...
industries, and with other industrialized countries, to provide additional perspectives on resources currently devoted to or needed to support technological innovations that reduce GHG emissions. Federal Funding for Energy-Related R&D According to the National Science Foundation (NSF)
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government spending on energy R&D against that of other industrialized countries. To account for the different sizes of national economies, Figure 5.5 (developed from data published by the International Energy
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. Both countries increased federal energy R&D spending in response to the oil shocks of the 1970s, then decreased funding in the 1980s when the crisis subsided.
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Private-Sector Funding of Energy-Related R&D Figure 5.5 editable The level of private-sector funding of energy-related R&D is much more difficult to determine. The IEA estimates the total worldwide spending on energy-related R&D by private firms at between $40 and $60 billion per year, although it notes that this spending is "only partly related to clean energy" (IEA, 2009b)
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From page 147... ...
In 1994, utilities on average devoted about 0.3 percent of their revenues to R&D. The GAO interviewed utility R&D managers who reported that, due to deregulation, utilities were shifting the focus of their R&D from collaborative projects benefiting all utilities to proprietary R&D, and that companies were shifting from long-term advanced technology R&D (e.g., advanced gas turbine and new fuel cells)
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L I M I T I N G T H E M A G N I T U D E O F F U T U R E C L I M AT E C H A N G E TABLE 5.2 Year 2007-2008 R&D Spending by Industry for U.S.-Based Firms Included in the List of the Top Global Companies Ranked by R&D Investment R&D Investment Sales R&D/Sales (millions) (millions)
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SOURCE: Same as Table 5.2. TABLE 5.4 R&D Spending by All Firms Identified as "Utilities" in the 2008 List of the Top 1,400 Global Companies Ranked by R&D Investment.
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Workforce Available to Support Technological Innovation Accelerating the pace of technological change to reduce GHG emissions will require a skilled workforce in all stages of the technological change process depicted in Figure 5.2 (i.e., not only for the development but also for the diffusion of new technologies)
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From page 151... ...
degrees in science fields has grown significantly over the past two decades, the percentage for engineering fields has declined by nearly 50 percent since its high in the mid-1980s. Sustained progress in technological innovations to reduce GHG emissions is likely to require increasing numbers of engineers and scientists in a variety of disciplines.
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Software 93.7 39.4 Scientific R&D services 44.7 27.4 Architectural, engineering, and related 41.4 26.4 services Communications equipment 49.9 23.8 Semiconductor and other electronic 97.4 23.7 components Computers and peripheral equipment 45.1 18.3 Pharmaceuticals and medicines 79.9 17.0 Navigational, measuring, electromedical, 74.6 16.6 and control instruments Computer systems design and related 74.5 15.4 services Other information 22.0 11.5 Other computer and electronic products 6.2 11.3 Wholesale trade 15.5 10.0 Machinery 62.6 9.4 Resin, synthetic rubber, fibers, and 9.4 9.4 filament Other professional, scientific, and 13.5 8.9 technical services Motor vehicles, trailers, and parts 89.2 8.6 will need advanced (post-high school) training offered in community colleges and other institutions.4 4 The American Wind Energy Association reported that, at the end of 2008, it was able to identify over 100 educational institutions that are offering or developing programs that focus on wind or renewable energy.
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Key Findings on Available Resources Fostering technological innovations to reduce GHG emissions on a large scale will require widespread efforts to develop and deploy low-emissions technologies. A vibrant and sustained R&D program, especially focused on low-emissions energy production and utilization technologies, is a cornerstone of that process, along with the availability of a skilled R&D workforce.
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The trend in total graduate and undergraduate degrees in S&E as a percentage of the U.S. population has been roughly constant since 1970.
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degrees granted as a percentage of the total population, showing the separate trends for science fields and engineering fields. The trend in undergraduate science degrees as a percentage of the U.S.
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For U.S.-based energy companies, this ratio is far below that of other leading technology-based industries, suggesting a major shortfall in the ability of the U.S. energy industry to bring about the technological innovations that are needed.
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ASSESSMENT OF CURRENT U.S. INNOVATION POLICIES As noted earlier, achieving and accelerating technological changes that reduce GHG emissions on a significant scale will require policies not only to promote and sustain a vigorous program of R&D but also to establish and expand markets for low-GHG technologies and to help commercialize and bring new technologies to the marketplace.
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policies that directly or indirectly support technological innovation have contributed to the progress made to date in decreasing the demand for some types of energy services (such as lighting and refrigeration) and in enabling increased use of some low-carbon energy supplies (such as wind and solar power)
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Unequal taxation of The federal tax code discourages capital investments capital and operating in general, as opposed to direct expensing of energy costs.a expenses Unfavorable tariffs Utilities impose tariffs (e.g., standby charges, buyback rates, and uplift fees) on small generators seeking to connect to the grid.b Utility pricing policies Unfavorable electricity pricing policies present obstacles for an array of clean energy technologies; these include the regulated rate structure, lack of real time pricing, and imbalance penalties.
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Emissions standards that are input based rather than output based discourage process improvements that would result in lower emissions. Connection standards The ban on private electric wires crossing public streets penalizes local generation of electricity, which could reduce transmission losses and increase overall efficiency.c Ineffective Regulatory loopholes Federal Corporate Average Fuel Economy standards Regulations credit vehicles for flexible fuel (E-85 capability)
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. the production tax credit is often cited as a key policy instrument for stimulating investments in clean energy technologies, such as wind turbines.
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Private-sector R&D in energy industries also is extremely low compared to the national average for all industries, and especially low compared to innovative industries such as information technologies or biotechnology. Expanding direct R&D programs for low-emissions energy production and utilization, as well as other areas related to GHG emissions reductions, is also a critical element of a comprehensive policy.
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Given the magnitude and rate of technological changes needed to limit future climate change, there is an immediate need to adopt policies to accelerate technological innovation throughout the U.S. economy.
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Table 5.1 identifies a wide range of policy options, in addition to traditional R&D spending, that the federal government can use to help spur technological innovation and expand markets for low-GHG-emissions technologies. Creating some form of substantial and sustained carbon-pricing system (discussed in Chapter 4)
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